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Pervasive Technologies Project Working Document Series: Document 2 Literature Review on Competition Law + IPR + Access to < $100 Mobile Devices

Posted by Amulya Purushothama and Nehaa Chaudhari at Jan 01, 2015 01:25 AM |
This note is the second document in the series of Working Documents that I will be creating for my research under the Pervasive Technologies: Access to Knowledge in the Marketplace (“PT Project”).

View the first document here. Note: The research was for this blog post was done by Amulya Purushothama which wasn't acknowledged earlier.


This note will serve as the literature review for my research paper under this project. This note- to be revised periodically- maps the existing literature around questions of competition law intersecting with intellectual property law on the specific issue of enabling access to sub hundred dollar mobile devices; which might be impaired as a result of intellectual property protections, particularly standard essential patents.

This note will explore the literature around the relationship between intellectual property and competition law; with a specific focus on the antitrust/competition concerns that arise around the licensing of standard essential patents. This note will study the approach adopted in other jurisdictions in the employment of existing mechanisms in competition law as possible solutions to issues with the licensing of standard essential patents.

Literature Review

Smartphones and Access to knowledge.

The Avendus Capital report[1] on mobile data usage in India provides important information about mobile internet users in India. Particularly the striking fact that more than half of the internet users in India use it on their low cost mobile phone and that access to these phones therefore becomes a step toward access to the internet. John Harmen Valk and others [2] have through their report demonstrated how mobile phones with internet access have been used to further educational outcomes in India and Asia and underscores the idea that access to such technology is important.

Competition Law and Intellectual Property

Academic writing around the nexus between intellectual property law and competition law presents varied perspectives; particularly on the question of whether they each acted as incentives for innovation, or whether competition law hindered innovation that intellectual property (seemingly) promoted. This narrative does not question a more fundamental concept; of whether intellectual property protections necessarily incentivized innovation; but takes that as the underlying assumption that they do.

Gitanjali Shankar and Nitika Gupta have noted that antitrust law and intellectual property have in the past seen to diverse and work against each other with different approaches to monopoly and that the two have also been viewed as related to each other in so far as intellectual property has been viewed as one of the tools to regulate competition in the market place. they propose that if the latter approach is taken and the two branches of law are seen to converge, two guidelines must be followed in to balance the various interests and ensure clarity, first that IP laws must only be extended by legislation and not through judicial interpretation, the second that when two interpretations are available during the enforcement of any intellectual property, that interpretation must be chosen which is in line with encourages the free market and promotes fair competition.

They have argued that both antitrust law and intellectual property have separate operational areas and their functions must be kept independent of each other. They argue that the domain of intellectual property concerns the assignment and defense of intellectual property rights and the domain of antitrust deals with the use and exercise of such rights within the market. They argue that competition law does not call into question that basis of IPRs that it doesn't question the exclusivity of legal rights, merely their abuse which results in unfair trade practices. They argue that the distance between economic and legal monopolies should be maintained and these fall within the domains of antitrust law and intellectual property respectively. They further argue that antitrust law exists to ensure that the IPR owner does not abuse his rights and thus bolsters intellectual property rights. [3]

Robert Pitofsky while reviewing a work of Prof. Mark Lemley explains that while anti-trust laws and intellectual property laws have the same long term goals of incentivizing innovation and investment in innovation, they are bound to conflict with each other in the short term as anti-trust law seeks to achieve this goal via limiting the possibilities of a monopoly and further ensuring that monopolies do not abuse the power they enjoy in the market place. Antitrust policies assume that the free market will fairly allocate resources and thereby encourage innovation efficiently. Pitofsky goes on to state that intellectual property on the other hand believes in rewarding innovation and thereby incentivizing investing in innovation, intellectual property is basically a grant of limited monopolies to ensure that costs of innovation are recovered and product quality is maintained. He argues that it is critical to ensure that patents are granted after thorough analysis to ensure a balance between anti-trust policies and intellectual property rights and to ensure that the larger goals of incentivizing innovation are achieved.[4]

Katrina Perehudoff and Sophie Bloemen have argued that anti-competitive strategies such as defensive patenting (the creation of weak and frivolous patents around their main patent) and vexatious litigation (the use of litigation as a threat to smaller and medium enterprises who cannot afford costs of litigation) have ensured that the bestselling originators medicine dominates the market for artificially long periods of time ensuring that the company therefore profits at the expense of public interest and obstructs widespread access, it is argued that such practices go against the aims of the patent system which were to ensure that the innovator could recoup costs of invention and in fact hamper incentives to invent. [5] It is submitted that while in this instance the discussion of defensive patenting as well as holding out is in the context of healthcare, similar trends have been witnessed in the space of technological patents as well. With standard essential patents for instance, there exists a very real danger of frivolous litigation and hold-outs ensuring market dominance by larger players, forcing out smaller and medium sized enterprises.

While acknowledging that intellectual property law and competition law might both seek to achieve a common goal of incentivizing innovation, Daniel Ravicher and Shani Dilloff have argued that the scrutiny of intellectual property exploitation from an antitrust perspective lacks economic and political merit. They argue that governments and courts have time and again preferred to enforce antitrust policy at the expense of enforcing intellectual property rights as evidenced by the cases of International Salt Co. v. United States[6], United States v. Lowe's Inc. [7], and Siegel v. Chicken Delight, Inc.[8] among others. They argue that the law depends on the flawed assumption that intellectual property confers upon the rights holder some kind of market power through creation of monopolies as evidenced by Jefforson Parish Hospital District No.2 v. Hyde[9] and the U.S. Department of Justice Guidelines on licensing of intellectual property[10] and is therefore in the wrong.

They argue that no such power is conferred on the rights holder because intellectual property rights do not confer monopolies so much as they ensure that a certain standard of uniqueness is assured, and that this standard of uniqueness falls short of the uniqueness required to obtain monopoly power within a market. They argue that IPRs do not grant the ability to raise prices above the competitive level and do not grant the right to exclude a rival or to exclude new entrants in the field, they only grant a right to prohibit others from exploiting their creation in an unfair manner and provide for sufficient limitations and exceptions to ensure that fair exploitation of their works is still allowed. And therefore while sound economic theory that ensures free marketplace through government regulation underlies most of antitrust policy, scrutiny of intellectual property through an antitrust point of view is economically flawed.

In a departure from other perspectives, the authors in this paper also argue that the factors affecting the employment of antitrust policies are not entirely legal; and that this preference is often a reflection of non-meritorious factors such as arguable predictions for the future, difference in financial stability of the competing parties, the political persuasion of the decision maker or the posturing of the parties and the courts being simply hostile to intellectual property rights and is unfair to intellectual property owners. They further argue that this preference is politically indefensible as it undermines the intent of the legislature. They argue that because of these things the case law so far that deals with this conflict is unreliable, unpredictable and not credible. They lastly argue that the solution out this conflict is to ensure economic efficiency by exempting intellectual property rights from scrutiny based on antitrust policies.[11]

Robert Anderson argues that IPRs do not inherently confer market power on rights holders and that in many cases restrictions on licensing could encourage competitive behavior and economic efficiency while not losing sight of the fact that IPRs can result in anti-competitive behavior in certain circumstances, particularly in context of network industries and that competition law must respond to these issues. This paper also makes a reference to the Trade Related Agreement on Intellectual Property Rights ("TRIPS Agreement"), and the provision that it makes that allow member countries to curb anticompetitive practices through Article 8.2 and Article 40 and thus catering to the interests of developing nations. The paper also notes that the TRIPS Agreement does not set out a specific list of practices that should be treated as abuses. Further, this paper goes on to analyse intellectual property regimes in the US, Canada, Japan and the EU and concludes that the US has maintained a liberal environment for granting of intellectual property rights while being cautious of abuse of IPRs for anticompetitive purposes, that Canada on the other hand has been suspicious of legislative efforts to curb the proper use of IPRs that the EU has adopted a far stricter approach to the issue to achieve market integration, and that Japan has chosen a somewhat middle path by providing for a case by case evaluation of practices. It is argued that certain restraints on international trade such as the restriction on parallel importation due to IPRs segment markets and is harmful to trade and collective innovation and some mechanism for exhausting of these rights must be considered. [12] This cross jurisdictional analysis is particularly useful, and will be examined in detail in my research paper.

Elieen Mc Dermott, in a discussion on FTC public hearings in December 2008 to discuss the overlap between intellectual property laws and antitrust and competition laws, identifies that Innovation Alliance, an organization that represents technology patent owning companies put forward three principles to govern antitrust policies, the first to define antitrust policy to promote consumer welfare and to limit its role to conduct that has "a demonstrable anticompetitive effect", second to bring on board the diverse range of interests and business models involved and third to ensure that principles behind patent law have evolved before allowing antitrust enforcement agency involvement in patent cases.[13] This submission by Innovation Alliance will now be studied in greater detail while attempting a submission on India's stance on competition law issues in the licensing of standard essential patents.

Herbert Hovenkamp has argued that for most of history, antitrust law and intellectual property law have undermined their own purpose of encouraging innovation by protecting too much, whether it is the shielding of inefficient business from competition or the shielding of IPRs beyond what is necessary to incentivize innovation, in both cases the consumer is harmed and the costs of innovation increases. He argues that while it is good that we have lately come to view patents as a kind of property as opposed to a kind of monopoly, since there is no real proof that patents lead to market power, we haven't extended to patents the same kind of conditions we extend to other kinds of property, like the obligation to define the boundaries of ownership another being the obligation to ensure that notice of the claim to property is rendered in time, neither of these obligations, he says, are imposed upon patent holders. He states that this leads to over protection and wastage of state resources.

He goes on to offer a few principles for antitrust in innovation intensive markets that involve exercise of patent rights; the first being that the purpose of antitrust must not be to fix defects in other regimes, but only to correct private markets, second that any antitrust or intellectual property intervention is justified only when congress or a tribunal has a reason for thinking that such an intervention is necessary to ensure more competition or more innovation, third is that many IP practices do not conflict with antitrust laws and antitrust policies shouldn't intervene in such cases, fourth that innovation provides society with more gains than simple production and trading under constant technology and therefore, when we have to choose between innovation and competition, we must choose innovation, fifth that innovation is more than what is simply defined under intellectual property law and at times, when practices seem clearly anti-competitive and IP statutes do not provide us with answers, we should consider antitrust policies as guidelines, sixth that IP protections can at times protect competition more efficiently than antitrust legislation, seventh that IP law must constantly examine its roots as antitrust legislation has and ensure that any expansion of IPR is well thought out.[14]

John Barton examines antitrust treatment of oligopolies that use IPRs defensively to block new entrants into the market. These oligopolists each have substantial patent portfolios that are infringed by its competitors but never a matter of litigation as there is the fear of counter litigation. Therefore there is an implied licensing of patent portfolios among the oligopolists. It is further argued that under systems like this, while there is an incentive for firms to acquire more patents to build defensive portfolios, there is no incentive to actually carry out new research therefore firms will obtain patents on existing research base and therefore this stunts innovation. Further oligopolists holding cross-infringing patents may put up entry barriers for new entrants and thereby dis-incentivize innovation. Due to all of these reasons, the paper argues for patent law reform and appropriate application of antitrust analysis to ensure that the IP system encourages innovation.[15]

Essential Facilities Doctrine

This section of the note looks at the literature surrounding the Essential Facilities Doctrine- an aspect of antitrust law that is employed in order to adjudge behavior as anticompetitive or the lack thereof.

Essential facilities doctrine is an aspect of antitrust law that imposes a duty upon firms that have patents/ copyrights or trade secrets with regard to an essential facility to ensure that they do not put in place a monopoly and make the facility available to their rivals. In the context of IPRs, an essential facilities doctrine functions in a way that is equivalent to compulsory licensing regimes. Different jurisdictions adopt different standards and approaches to the employment of this doctrine. By tracking the literature around this doctrine, these different approaches across jurisdictions will be studied, including landmark cases, and submissions made in the research paper on whether this doctrine may be employed in India - specifically to adjudge whether there was a case to be made out for anti -competitive behavior in the smartphone wars on standard essential patents.

MCI Communications Corporation v. AT&T[16] is the landmark case with regard to the essential facilities doctrine, in this case MCI argued that AT&T's switching equipment was an essential facility and access to such an essential facility was necessary to conduct telemarketing business. The court in this case laid down the necessary elements to establish a claim to essential facilities:

a) Control of an essential facility by a monopolist

b) Competitors inability practically or reasonably to duplicate the essential facility

c) The denial of the use of the facility to a competitor and

d) The feasibility of providing the facility.[17]

Richard Gilbert and Carl Shapiro have argued that a unilateral refusal to deal (which is often one of the conditions that needs to be met before the essential facilities doctrine is employed) can be justified in the context of profit-maximizing firms in certain cases such as: cases where the owner of the facility wants to ensure a certain level of service quality with his facility, cases where the owner wants to prevent free riding, prevent new entrants into the market, cases where the owner wants to promote price discrimination in the sale of the final product, and cases where the owner is not adequately compensated for licensing out his essential facility. These justifications it is argued increase economic efficiency in the market, ensure quality of services rendered, increase incentives for investment and innovation etc. It is further argued that in the long run, it is more economically efficient for companies to refuse to deal rather than to set higher prices, simply because in a system where one cannot refuse to deal, the incentive for firms to misrepresent their actual costs to obtain licenses etc., and further that an obligation to license can have negative effects on economic welfare, it can reduce welfare in the short run by forcing inefficient licensing, it can also reduce welfare in the long run by reducing incentives for innovation and investment and creation of intellectual property.[18]

Robert Pitofsky, Donna Patterson and Jonathan Hooks on the other hand have argued in support of the essential facilities doctrine and supported the use of this doctrine in cases concerning intellectual property rights, the authors here argued that the harshness of the anticompetitive effects of denial of access take precedence over business justifications, especially when specific animus to injure a rival has been proven. The authors argued that while it was important to ensure that the doctrine was not expanded to include a vague and amorphous set of rights, it was important to ensure that the monopolists arguments against the doctrine should not succeed regardless of the nature of the essential facility, whether it is intellectual property or even if the case did not involve vertically related markets.[19]

Paul Maquardt and Mark Leddy in their response to Pitofsky, Patterson and Hooks argued that it is not anticompetitive behavior if the normal enforcement of an intellectual property right results in market power is getting skewed in favor of the rights holder, and the intellectual property rights should not be limited by compulsory licensing. They have argued that the essential facilities doctrine should only apply in cases where the rights holder attempts to leverage his exclusionary rights from the market in which the innovation competes into a related market or in cases of abuse of those rights because in cases where the rival is competing directly with the facility incorporating the intellectual property protection, the rights holder would not be damaging incentives to innovate as he would in cases of abuse or in cases of leveraging the protection to attain profits in a related field. They argue that to force compulsory licensing in other cases where the rival is in direct competition to the right holder would harm incentives to innovate and create intellectual property, a goal that both intellectual property rights and anti-trust laws are supposed to achieve. [20]

Martin Cave and Peter Crowther have argued that the European Commission seems to have embraced the essential facilities doctrine quite well despite not properly codifying the criteria used to determine whether a facility is essential and access to this facility should be mandatory. They have found that in the U.S., a) the courts have decided the question of whether or not a facility is "essential" on the basis of whether new entrants to the field would be able to duplicate the facility as evidenced by the cases of MCI Communications Corporation v. AT&T[21] and Hecht v. Pro Football Inc It is as yet undecided at what point a refusal to deal in a facility will render the rival without an alternative option. In Camco Inc. v. Providence Fruit & Produce Bldg.[22]it was decided that a facility was essential insofar as alternatives were inferior. There is no requirement of a duplication of the facility to be impossible as evidenced from Otter Tail Power Co. v. United States[23] . They have also found that as per Aspen Skiing Co. v. Aspen Highlands Skiing Corp. [24], there is no general duty to deal on the monopolists. They have also found that liability under the essential facilities doctrine can be found in the presence of the following conditions: a) control of an essential facility by a monopolist, b) a competitor's inability to duplicate the facility, c) the denial of the use of the facility to the rival, and d) the feasibility of providing the facility

Under analysis of the law in Australia, they found that section 46 of the Trade Practices Act, 1974 proscribes taking advantage of a substantial degree of market power for the purpose of a) eliminating or substantially damaging a competitor, b) preventing the entry of a person into a market or c) deterring or preventing a person from engaging in competitive conduct in a market. They found two important cases in Australian law, Queensland Wire, the first Australian case to consider adopting the US essential facilities doctrine which ruled that the monopolistic firm couldn't refuse to sell facilities to the smaller firm if had been subject to competition in the supply of that product while not actually mentioning the essential facilities doctrine, the second case of importance would be Pont Data litigation where Pont Data wanted to supply stock exchange information which the Australian Stock Exchange had a monopoly on, the court on appeal held that ASX should be ordered to supply information but "on terms designed to obtain a broad and substantial justice between parties"

They have further argued that there is even less certainty in respect of the price at which access to an essential facility should be made available. This is evidenced by their study of the laws in New Zealand. They found that in New Zealand the landmark judgment to study would be the Privy Council judgment in Clear Telecommunications Ltd v. Telecom Corporation of New Zealand Ltd. This case arose out of a dispute between the state owned telecom which monopolized the public telecommunication system and Clear a new entrant into the market after Telecomwas privatized. The dispute mainly concerned about the price which Clear should pay Telecom for providing access to the Telecom network, while Clear argued that it should only be required to pay Telecom for the direct costs of providing access, Telecom held that Clear should pay the equivalent of profits which telecom would lose by granting access- the opportunity costs. The Privy Council agreed with Telecom in that insofar as Clear had not proved that it would be forced to pay monopoly prices because it was paying opportunity costs, it had not been proved that there were any entry barriers to the market.

In their analysis of the European Union, these authors found that Article 86 prohibits the abuse of the dominant position within a common market by under takings that consist in particular of a) directly or indirectly imposing unfair purchase or selling prices or unfair trading conditions, b) limiting production markets… to the prejudice of consumers, c) applying dissimilar conditions to equivalent transactions. The European Court of Justice has already decided that dominance can be assessed by a reference to the dependence of the consumer on the supplier inCommercial Solvents v. Commission. [25] And in Hugin v. Commission[26] The court first mentioned essential facilities in the United Brands case[27] where the ECJ held that the charging of discriminatory prices against and the refusal to supply a longstanding customer and distributor who had taken part in a sales campaign on behalf of a competitor had infringe article 86. Therefore if a firm acts in such a way that it could possibly affect rivals by precluding access to an essential facility, it would be an abuse of intellectual property.[28]

Albertina Albors-Llorens has reported on the recent judgment of the ECJ in Oscar Bronner CmbH and Co. KG v.Mediaprint Zeitungs -und Zeitschriftenverlag CmbH & Co. KG and others[29], the ECJ in this case has defined "essential facilities" as a "facility or infrastructure without access to which competitors cannot provide services to their customers"[30] under the doctrine, any dominant undertaking that owns or controls an essential facility and refuses without an objective justification [31] to make the facility available to its competitors or makes it available under discriminatory terms abuses its position of dominance. The court here distinguished the case from earlier case law including the case of Commercial Solvents and from the Magill case[32] where the court held that copyright holders who published guides of television programmes for their channels refused to license an independent company which wanted to publish a comprehensive television program guide had based their position of dominance and prevented a the emergence of a new beneficial product to the consumer and therefore it was not objectively justified and that it was otherwise impossible for Magill to obtain the information that was essential to carry on its business. She reports that the court in Bronner held that this case was distinguished from the precedent as there were less advantageous methods of distribution available and it wasn't impossible forBronner to set up their own home delivery system.[33]

Gregory Gundlach and Paul Bloom have analyzed the history of the essential facilities doctrine and cases refusals to deal , they have noted the refusal by Microsoft to deal with firms seeking to provide compatible software products and share its knowledge of its key operating systems for IBM compatible computers and its investigation by the Federal Trace Comission (FTC). They trace back the essential facilities doctrine from the case of United States v. Grinnel Corporation[34] which held that monopolization necessarily had to include the possession of monopoly power in the relevant market and the acquisition or maintenance of that power as distinguished from growth or development as a consequence of superior product, business acumen or historic accident. Preventing a rival from accessing an essential facility was held to be evidence suggestive of intent to monopolize and a challenge to the Sherman Act. They argue that this doctrine presents a challenge to marketers as they now have to ensure that they don't compete themselves into antitrust challenges, ensure that rivals don't attempt to free ride on their research and investment, they argue that while forcing firms to enable their rivals to access their essential facilities is at odds with the idea of competitive behavior, prudent application of this doctrine may ensure that welfare is substantially enhance and innovation is encouraged. They propose that the duty to deal be imposed only when commercial viability of the rival is at stake as a measure of protecting the rights of the firms. They also propose that new modes of competition such as strategic alliances, long term partnership be kept in mind before when forming future policy development in the area. [35]

Spencer Weber Waller and William Tasch have compared the law in the US with the law in the European Union and several other countries, and argue that there is a growing international consensus that it is sometimes appropriate to require a regime of nondiscriminatory access to infrastructure and related facilities. They have pointed out that common law countries and civil law countries have responded to the issue in different ways, for example, Germany has dealt with the issue by passing the German Act Against Restraints that contains provisions regarding abuse of dominant position in refusal to allow other undertakings access to essential facilities without proper justification. South Africa, they note has adopted a two pronged approach to unilateral refusal to deals, one through the South African Competition act that prohibits refusals to deal and another through the same legislation that prohibits refusal to supply scarce goods to a competitor when supplying those goods is economically feasible. They argue that since the essential facilities doctrine has become an accepted law in most competition jurisdictions, the US must work to harmonize their laws with the rest of the world to ensure better trade practices. [36]

Daniel E Troy has argued that post the Hecht v. Pro-Football, Inc. case, jurisprudence in competition law shifted from intent to the actions of the monopolists. He argues that there are no clear rules regarding when the essential facilities doctrine should be invoked or a consensus as to what the doctrine requires once invoked. He proposes that the resulting confusion be resolved by ensuring that the essential facilities doctrine cover all arbitrary refusals to deal when such a refusal threatens the commercial viability of the rival party, or when access to the facility is necessary for entry into the market or when duplication of the facility exceeds the standard cost of entry.[37]

Howard Shelanski has argued that unilateral refusal to deal must be susceptible to antitrust scrutiny, he argues that neither economics not IP policy considerations provide a sound basis for exempting refusals to supply IP from antitrust laws on unilateral refusals to deal. He argues that while there may be a case for treating IPRs different on some occasion that should be based on logical links between IP and the considerations that weigh against antitrust mandates to deal in any property: deterrence of innovation, investment or precompetitive conduct.[38]

Royalty Stacking in Smartphone Industry

Ann Armstrong, Joseph J Mueller and Timothy D Syrett[39] have collected and analysed data on the royalty burdens to be faced by a standard smartphone supplier and the adverse effects royalty stacking might have on competition in the smart phone industry. It is an article rich in detail and carefully explains the costs of each of the components that make up a smartphone, in doing so they also trace the mobile phone Standard Essential Patents (SEP) litigation occurring in United States of America (USA). They conclude that royalties demands on a smartphone could exceed the cost of the devices components, and that due to royalty stacking, costs of patent royalties act as an entry barrier for many suppliers thereby limiting competition in the market. They have argued that in calculating the royalty for a component, licensees, advocates and courts should base their conclusions on the price of the component and not on percentage of sales price of the entire smartphone which is the current practice. They have argued that this valuation is even more important for standardized technologies because patent holders usually only have a small slice of the declared patents for a particular standard and where that standard is just one of the many supported by the device. They present data to prove that when royalties are so vigorously calculated, they turn out to be a fraction of what patent-holders claim. This article was used mostly for background information on how royalty stacks work and how FRAND prices must ideally be calculated, and as a source of information on litigation surrounding royalty stacking in USA.

Damien Geradin in his articles[40] on pricing abuses by SEP holders in SSOs in EU and USA documents the evolution of competition law in these courts and the work of the Federal Trade Commission in this regard. He examines the role of the FTC in quite some detail, and this article provided important background information on the question of the potential role of the CCI.

Bouthenia Guermazi and David Satola[41] have argued that in creating a right enabling environment for the ICT, one of the goals of regulation is to create a stable, open and future-proof environment that encourages access and doesn't limit it.

Tracing Mobile Phone SEP Litifation:Treatment by European Commission and Federal Trade Commission

Damien Geradin and Miguel Rato[42] have inquired into the question of whether SSOs provide for an environment of exploitation and abuse due to royalty stacking, weak enforcement of FRAND terms, and hold-ups. They have identified three criteria for the establishment/adoption of an industry standard - first, that it is a set of technical specifications; second, that these technical specifications provide a common design; and third, that the common design provided may be for a product or a process. These criteria have been used in the paper.

Michael A Carrier in his article[43] focuses on the smartphone industry and the ongoing patent and FRAND licensing litigation wars. He traces court rulings on holdups and injunctions granted on SEPs and discusses EC investigations into Motorola and Samsung in detail. This article was useful in that it provided for a good resource on recent judgments surrounding FRAND Licensing and SEP litigations focusing on the smartphone industry.

Mark A Lemley and Carl Shapiro[44] in their article demonstrate that even a threat to obtain a permanent injunction enhances the patent holders negotiating power, leading to royalty rates that exceed a natural benchmark based on the value of the patented technology and the strength of the patent. They argue that such overcharging occurs more noticeably in the case of weak patents covering a minor feature of the product with a sizeable price/cost margin. They present data to show that these holdup problems are reduced if courts regularly grant stays to permanent injunctions. , that they are magnified in the presence of royalty stacking, and that royalty stacking can become a huge problem especially in a standard setting context. This article was useful in understanding the holdup issues with regard to SEPs and the effect of royalty stacking.

Lemley and Shapiro in another article[45] have argued that one method of efficiently settling FRAND disputes would be to impose an obligation on the SEP owner to entire into a binding final offer decided in arbitration with any willing licensee to determine the royalty rate. This article provided important insights into the holdup problem and possible solutions that could be considered.

Phillipe Baechtold in his presentation[46] makes the argument that the central problem with the approach to solving the issue of ensuring Standard Setting organisations achieve interoperability and allow for licensing on FRAND terms is that a problem with patent laws is being solved in a manner that focuses other legal systems such as competition law, health law etc. He argues that there is a need to address these issues within the patent system itself. This article has been used to understand different solutions to the issue that have been proposed so far.

Richard Schmalensee[47] in his article argues that competition policy should not favour patent holders who would use their patents to stop innovation and that SSOs should determine standards based on lower post-standard royalty rates. The claim of interest in his article is that in the absence of a deceptive act, it would be difficult to prove in a case that a differing standard could have been adopted had there been a full disclosure of patent.

Gertjan Kuipers[48] has provided a useful resource on the Apple v Samsung cases in Netherlands and this has been useful to understand non-disclosure of patents as an anti-competitive practice within SSOs. Leon Greenfields article that surveys non-US decisions on SEP disputes also makes for a useful resource in the same regard. [49]

In their article, Damien Neven and Miguel de la Mano[50] discuss the activities of the Directorate General for Competition at the European Commission during the course of one year and discuss cases and policy developments during that time. It served as a useful resource on cases relating to violation of FRAND Commitments and in understanding the functioning of SSOs.

Bjorn Lundgvist[51] has analysed EU and US antitrust/competition law, and argued that Orange Book Standard case where it was held that abuse of dominant position is a valid claim if a patentee refuses to conclude a license agreement on non discriminatory and non-restrictive terms, is problematic as the potential licensee only has the option of paying the customary royalty rate or accepting the rate that the patentee offers by applying "reasonable excercised discretion" and that this doesn't give much leeway for licensees to question the validity of the rate.

James Abell[52] documents cases in the US federal courts regarding standards development organisations, antitrust law and fraud his analysis of the Broadcom Corp v. Qualcomm Inc., was particularly well done and proved to be useful in tracing SEP litigation in the US. Koren W Wong Ervin [53] in her important article traces SEP litigation across the world in various countries. This makes for an important resource on the subject as it serves as a primer on SEP litigation in many jurisdictions including China, Japan, India, EU and the US among others.

Mobile Phone SEP Litigation in India

Ravikant Bharadwaj in his article[54] provides a broad overview of standard setting in India and the competition and IPR issues associated with it. He makes the important argument that once an industry standard has been set, and since the goal is to ensure inter-operability, denial of access to these standards on FRAND terms could become barriers to trade.

Anubha Sinha[55] in her report on Spicy IP traces the Ericsson- Micromax dispute at the Competition Commission of India (CCI), this has been used as a background document to trace the timeline in the dispute while tracing mobile phone SEP litigation in India.

Prashanth Reddy in his article [56] argues against interim injunctions stating that these injunctions should be used as an exception and not as a matter of a rule. He argues that in many cases courts either don't provide reasoning or provide insufficient reasoning behind orders granting injunctions. He argues that protection of IPRs cannot be a convincing reason on its own in this context particularly because patent infringement cases are complicated and can only be decided after a full trial and appreciation of evidence. In this context, he argues that issuing interim injunctions as a matter of course is a harmful practice that must be done away with.Vaibav Choukse makes a very similar argument in his article as well.[57]

John E Matheson in his article[58] seeks to understand how standards must be developed and what best practices can be followed by India in forming its IPR policy. He specifically argues that the litigation costs that invariably occur during hold ups and reverse hold ups ensure that smaller companies and newer start-ups ultimately give in to patentees who enjoy more market power and can bear the litigation costs for as long as it takes.

Pankaj Soni and Satyoki Koundinya in their article[59] outline the questions at the heart of the mobile phone FRAND disputes and focus on the disputes in India including Ericsson-Micromax, Intex, Vringo and Asus and ZTE disputes providing a fairly comprehensive timelines of the same. They argue that the threat of injunctions often bring licensees to the discussion table which otherwise would not have happened and that disallowing this would disincentivise patentees from disclosing their patents. This article makes important arguments in terms of what would incentivize pro-competitive behavior and how policy surrounding holdups could influence anti-competitive behavior.

Abuse of Dominance and Competition Law and Policy in India

The Competition Commission of India Guide to Abuse of Dominance[60] lays out in clear simple terms what constitutes abuse of dominance under competition law in India, while it does not refer to case law on the matter, it does make for a great source for interpreting and understanding Indian competition law and was used for the same purposes.

Samir Gandhi[61] in his article analyses trends in enforcement of competition law in India. He provides data to prove that the CCIs decisions seem to want to establish a greater familiarity with complex tools of assessments like including economic measures etc. He argues that the CCI is eager to make up for lost time and therefore doesn't shy away from issuing judgments quickly and imposing severe penalties. This is useful in understanding whether or not the CCI is the appropriate and competent authority to deal with cases that are likely to come up involving the smartphone industry.

Pratibha Jain and others[62] conduct a fascinating study of how competition law is enforced in the country, in a fairly comprehensive report with individual case studies. They demonstrate quite clearly that the CCI refrains from laying down broad principles and restricts its rulings to the facts of a particular case. It also provides important data on how many cases are dismissed and in how many cases the CCI has found anti-competitive behavior. This data helps understand how effective or otherwise the CCI has been.

Archana Shanker and Shraddha Singh[63] in their article have argued that competition law and IP must both be used in a harmonious manner. In doing so they have analyzed relevant legislation and important cases such as Micromax and Intex, They have analysed how capable the CCI or courts in India are when it comes to determining FRAND terms in the context of SSOs and SEPs. They argue that the CCI has shown a lack of understanding of the IP aspects in these cases and have focused on competition law to their exclusion. While this is a well written and informative article on mobile phone SEP litigation in India, it is important to point out that the article does not deal with how courts in India have failed to appreciate concerns regarding hold-ups while issuing stays or ex-parte orders.

Kanika Chaudhary[64] has written about jurisdictional issues that the CCI might face due to the wording of the Competition Act that states that the act is applicable to anti-competitive behavior notwithstanding other laws and yet another section stating that competition law must be harmonized with existing laws. She argues that there is a need to restructure competition law in this regard to avoid conflicts.

The CUTS International report on the CCI[65] provides for an important resource on comments about the CCI and its judgments and media reactions to the CCI. The report submits that while the CCI is generally seen to be doing well in the media, several academics have argued that the CCI is riddled by legal lacunae, that it lacks teeth and that because most of its orders have been appealed in courts, and it lacks autonomy due to rules of procedure, it is not an effective or efficient forum and needs to be improved by further legislation. The same has been corroborated by a report in the Indian Express that speaks of new bills that were in the offing in 2012 that were aimed at giving the CCI more teeth. [66]

Peter Alexiadis[67] in his outlines general principles of ex post and ex ante intervention and how the two disciplines come into tension with each other when competition law is involved in a dispute along with any other legal regime such as IPR laws. He explores ways in which these two disciplines must be balanced. This article was used to understand how the ex-post decisions involving competition law inevitably are backward looking and adopt a narrow view of the product, looking largely at its demand side-substitutability. This helps explore the argument that a sector specific regulatory body could better address complex technical and economic questions specific to the industry, as opposed to litigation merely being played out in the courts.

George Cary and Mark W Nelson[68] have delved into the question of the role of antitrust in policing abuse by patent holders with royalty stacks in standard setting organisations. They have argued that it is important for a legal tool to police this abuse because while other areas of law may prove capable of addressing these issues, these disputes are, at their core antitrust disputes. And only antitrust law can ensure that private parties and government enforcement authorities can seek redress where there is harm to competition.

Suzanne Michael in her article[69] argues that SEP holders who have their patent incorporated as a standard stand to gain by increasing royalty rates beyond RAND terms and beyond their actual economic value as they hold a monopoly simply because they own the standard. She argues that this will harm consumer interest and slow innovation. She further argues that an ex-ante approach should therefore be taken in ordering remedies in these cases to protect consumer interest. She also looks into the question of holdups and injunctions in cases involving RAND commitment. But her argument about ex ante remedies in RAND cases is an interesting point relevant to the paper.

Anne Layne-Farrar, A Jorge Padilla and Richard Schmalensee[70] in their article delve into the question of what exactly would constitute FRAND terms in the context of licensing terms for essential IP in a standards setting organization. They have also analyzed the Georgia-Pacific guidelines and extending it to a standard setting organization and the numeric proportionality method proposed by courts in EU. They conclude that the Georgia-Pacific guidelines might work in FRAND disputes, that while this would leave FRAND basically undefined, it would be made an enforceable promise with an SSO and that these guidelines would provide sufficient direction and predictability in litigation. This article has been used to understand what kind of guidelines a regulatory body could be expected to codify for patent remedies in India.

Rahul Singh in his article[71] analyses how due to its nature, the CCI is not sector specific and is supposed to look at "anti-competitive behavior" in all sectors most of whom already have their own sector specific regulator. He argues that unlike sector specific regulators, the CCI can privately enforce orders and pursue claims for damages and that this makes the CCI better situated to deal with consumer welfare areas. He further argues that to reduce transaction costs, enhance legal certainty and predictability, enforcement of such disputes must be left in the hands of the CCI. This argument has been extended to argue that courts enforcing IPRs would be less suited to handle these matters and more likely to cause inefficiencies and unpredictability and a re-imagined, empowered CCI would be the best suited judge of these issues.

K.D.Raju in his article[72] analyses broadly the connection between IP laws and competition law in India. He argues that while the jurisprudence behind IPR and competition law has traditionally been viewed as incompatible with each other, in effect, they seek to further the same goals. He argues that the competition laws as they exist in India currently cannot effectively deal with the nexus with IPR and suggests that the CCI come out with IPR specific guidelines to deal with upcoming litigation in the area.

Apoorva and Shreeja Sen[73] in their report trace the stay orders in courts across India holding up CCI investigations and how this is symptomatic of the fact that courts do not understand concerns regarding hold-ups and reverse hold-ups in IP related cases where time is of the essence.

Karthik Jayakumar[74] has written about the Bhatia International case regarding arbitration, we use this to merely draw parallels with IPR laws in that just as in Bhatia the court held that arbitrations having their seat outside India were still within the jurisdiction of Indian courts and this was overruled in the BALCO case , the role of the CCI also has to be made clear through legislative reform or judicial pronouncement for the regulator to address questions of competition law across different sectors without a threat of stay orders from courts.

Nick Robinson in his article[75] speaks of good governance courts, and of how courts in India have used good governance and right to life to become essentially second governments regulating everything from encouraging the use of natural gas to regulated encroachment on preservation of public forests to guidelines for school safety at the expense of government and independent regulators. While Nick Robinson makes a larger argument about good governance courts, it is used only for the limited purpose of supporting the argument made in the paper about judicial interventions allowing for anti-competitive behavior.

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